Industrial real estate developer Corporacion Inmobiliaria Vesta SAB is speeding up its development pipeline after its US listing, its chief executive officer said on Monday.
Author of the article:
Bloomberg News
Michael O’Boyle
Published Jul 11, 2023 • 2 minute read
(Bloomberg) — Industrial real estate developer Corporacion Inmobiliaria Vesta SAB is speeding up its development pipeline after its US listing, its chief executive officer said on Monday.
The company is now planning to complete a pipeline of $1.1 billion of projects by 2025, two years earlier than initially planned, CEO Lorenzo Berho Carranza said in an interview.
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Vesta raised the most funds by a Mexican company in nearly 11 years in late June, bringing the total to $446 million with the over-allotment. The listing followed moves by Mexican real estate investment trusts that have raised funds over the past year to build out industrial parks including Prologis Property Mexico SA and Fibra MTY SAPI.
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“Given the strong demand coming from nearshoring as well as strong tailwinds from e-commerce, we are accelerating the growth plan,” Berho Carranza said.
Vesta’s US-traded shares rose 0.9% to $35.02 on Tuesday after Berho participated in the market opening at the New York Stock Exchange. The shares are up 13% since their debut on June 30.
Berho said Vesta’s internal management, where its executives are buying properties and developing buildings, was more aligned with what global investors are looking for compared to real estate investment trusts, or REITs, that use external managers to select properties.
“The listing in the US makes Vesta another North American company in the industrial REIT sector, doing the right things with the right corporate governance,” he said.
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Read More: ‘Sold Out’ Warehouse Operator in Mexico to Invest $700 Million
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Berho said the company plans to invest around $300 million a year from 2023 through 2025 into the slate of projects that would increase its holdings of industrial parks to 50 million square feet from 33 million square feet.
The funds from the listing will be channeled toward the $1.1 billion pipeline the company detailed at its investor day in June 2022, with the remaining amount funded from revenues and potentially new debt, he said. The nearshoring trend, in which companies move to Mexico to be closer to the US, is one of the most important structural changes for Latin America’s second-largest economy in decades, he said.
“Companies are deciding where to establish their manufacturing footprints. And it’s not happening in China. It’s happening in Vietnam, it’s happening in India, but also it’s happening in North America now,” he said. “The next couple years are going to be very intense.”
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Vesta has focused on clients in light manufacturing and logistics and plans from the beginning of development to ensure clients will have sufficient power, he said. More energy intensive manufacturing, such as battery production, could face hurdles, he said.
President Andres Manuel Lopez Obrador’s nationalist energy policies have enabled state-owned utility Comision Federal de Electricidad, or CFE to have transmission priority in the energy grid. Analysts have said the lack of sufficient energy supply could be a bottleneck that hinders the momentum of the migration of manufacturers to Mexico.
“For new developers, newcomers, it’s going to be very complicated to just come and buy land and think that they will get energy,” he said.
—With assistance from Daniel Cancel and Boris Korby.
(Updates with closing share price, CEO comments beginning in fifth paragraph)
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